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RBA vs Banks Interest Rates Part 2 – The Growing Gap

Posted on Monday, July 16th, 2012 at 11:59 pm

RBA and Banks Interest Rates Gap

As per my post on the 4th of May the major banks are increasing the gap between the Reserve Bank of Australia (RBA) cash rate and the Interest rates they charge their customers. Looking over the data from the year 2000 we can see how the rates gap has gone from a steady 180 percentage points (1.8%) difference to now a whopping 340 percentage points (3.4%) difference. It is no wonder why the banks are continually making massive and quite obscene profits, especially as they continue to also charge excessive fees.

Here is a table of the RBA rate changes versus the rates charged by the big banks since the year 2000. There is also 6 additional changes by the banks even when the RBA did not move its rates.

Date

RBA Movement

RBA Rate

Bank Variable Rate

Difference

2-Dec-12

-0.25

3.00

6.40

3.40

3-Oct-12

-0.25

3.25

6.60

3.35

6-Jun-12

-0.25

3.50

6.80

3.30

2-May-12

-0.50

3.75

7.01

3.26

20-Feb-12

0.00

4.25

7.41

3.16

7-Dec-11

-0.25

4.25

7.31

3.06

2-Nov-11

-0.25

4.50

7.56

3.06

3-Nov-10

0.25

4.75

7.81

3.06

5-May-10

0.25

4.50

7.36

2.86

7-Apr-10

0.25

4.25

7.11

2.86

3-Mar-10

0.25

4.00

6.86

2.86

2-Dec-09

0.25

3.75

6.61

2.86

4-Nov-09

0.25

3.50

6.24

2.74

7-Oct-09

0.25

3.25

5.99

2.74

15-Jun-09

0.00

3.00

5.74

2.74

8-Apr-09

-0.25

3.00

5.64

2.64

4-Feb-09

-1.00

3.25

5.74

2.49

3-Dec-08

-1.00

4.25

6.74

2.49

5-Nov-08

-0.75

5.25

7.74

2.49

30-Oct-08

0.00

6.00

8.32

2.32

8-Oct-08

-1.00

6.00

8.53

2.53

3-Sep-08

-0.25

7.00

9.33

2.33

14-Jul-08

0.00

7.25

9.58

2.33

9-Apr-08

0.00

7.25

9.44

2.19

5-Mar-08

0.25

7.25

9.32

2.07

6-Feb-08

0.25

7.00

8.97

1.97

11-Jan-08

0.00

6.75

8.67

1.92

7-Nov-07

0.25

6.75

8.55

1.80

8-Aug-07

0.25

6.50

8.30

1.80

8-Nov-06

0.25

6.25

8.05

1.80

2-Aug-06

0.25

6.00

7.80

1.80

3-May-06

0.25

5.75

7.55

1.80

2-Mar-05

0.25

5.50

7.30

1.80

3-Dec-03

0.25

5.25

7.05

1.80

5-Nov-03

0.25

5.00

6.80

1.80

5-Jun-02

0.25

4.75

6.55

1.80

8-May-02

0.25

4.50

6.30

1.80

5-Dec-01

-0.25

4.25

6.05

1.80

3-Oct-01

-0.25

4.50

6.30

1.80

5-Sep-01

-0.25

4.75

6.55

1.80

4-Apr-01

-0.50

5.00

6.80

1.80

7-Mar-01

-0.25

5.50

7.30

1.80

7-Feb-01

-0.50

5.75

7.55

1.80

2-Aug-00

0.25

6.25

8.05

1.80

3-May-00

0.25

6.00

7.80

1.80

5-Apr-00

0.25

5.75

7.55

1.80

2-Feb-00

0.50

5.50

7.30

1.80

While the Gillard APL government, and in particular the Treasurer Wayne Swan says we can shop around and move to another bank, since there is now no exit fees, the establishment and stamp duty fees make it hard for many to simply move banks, and the banks know this. Wayne Swan brags about how the Interest rates are so low, but refers to the cash rate and conveniently forgets to apply that to the actual rates being charged by the big banks in Australia.